How to calculate cryptocurrency profit for taxes
Crypto profit is sale proceeds minus your cost basis and related costs. Track each trade, pick a cost basis method, and report every taxable disposal.
Vahe HakobyanEditor-in-chief
Updated Oct 5, 20263 min readFact-checked
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You can calculate cryptocurrency profit from your own records. You will find your proceeds, subtract what you paid, and separate paper gains from realized results.
What records do you need first?
Start with a complete transaction history. For each buy, sell, trade, swap, spend and transfer, note the date, the amount, and the fair market value in US dollars at that time.
How do you calculate your crypto profit?
Profit or loss equals what you received minus your cost basis and related costs. Cost basis is what you paid for the asset, including purchase fees.
- 1Pick a method and match unitsChoose an IRS-accepted method such as FIFO or specific identification. Then identify which coins you sold, swapped or spent.
- 2Find the proceedsUse the fair market value in US dollars of what you received on the disposal date. For a crypto-to-crypto trade, the new coin's value is your proceeds.
- 3Subtract basis and costsSubtract what you paid for those units, including purchase fees, and subtract sale or network fees. The result is realized profit or loss.
- 4Separate realized from unrealizedUsually, only a disposal creates realized profit or loss. A value increase in crypto you still hold is an unrealized paper gain, so it is not part of this calculation yet.
What should you do after calculating?
Check for income during the year. Staking, mining and airdrop rewards are usually taxed at fair market value when received, and that value becomes part of your cost basis.
- Report each taxable disposal on the required IRS forms and schedules.
- Include staking, mining and airdrop income on the appropriate income line.
- Keep records with your tax return files.
- Stay consistent with your cost basis method.
Frequently asked questions
Treat the trade as a sale of the coin you gave up. Use the new coin's fair market value on the trade date as proceeds, then subtract your basis.
Rebuild them from exchange statements, wallet records, bank records and blockchain explorers. Document any estimates and be ready to show they are reasonable; the IRS may not accept unsupported estimates.
Yes. The IRS treats crypto as property, so capital losses usually go on your return. They can offset capital gains and some ordinary income.
Yes. A calculator can import trades and apply a cost basis method. Check the inputs against your own records, because wrong data produces wrong results.
